ANNUAL REPORT 2001 - Prudential plc

NOTES ON THE FINANCIAL STATEMENTS
CONTINUED
33. Cash Flow continued
2001 2000
Acquisitions £m £m
Net assets acquired:
Goodwill on acquisitions 171 108
Cash and short-term deposits – 16
Banking business assets – 714
Banking business liabilities – (535)
Interest in associate undertaking – (79)
Net assets held in long-term business operations 2 184
Minority interests in Egg – (120)
Other net assets 9 (24)
Net assets acquired 182 264
Cash consideration (paid) received after expenses (182) 12
Net impact on shareholders’ funds 0 276
Comprising:
Short-term fluctuations in investment returns after tax – 19
Profit on business disposals after tax – 167
Goodwill credited to reserves – 90
34. Acquisitions
Acquisitions in 2001 principally relate to the purchase of Orico Life Insurance Company of Japan and YoungPoong Life in Korea.
The effect of these transactions, which have been accounted for as acquisitions, was:
0 276
Japan Korea Other Total
£m £m £m £m
Fair value of consideration (including expenses) 139 23 20 182
Net assets acquired:
Financial investments 578 50 5 633
Technical provisions (587) (44) – (631)
Other 9 – – 9
Book and fair value of assets at acquisition 0 6 5 11
Goodwill recognised on acquisitions 139 17 15 171
The amounts included in the profit and loss account for 2001 in respect of these operations are not material. The goodwill is being
amortised from the date of acquisition over a period of 20 years.
35. Post Balance Sheet Events
Sale of UK General Insurance Business
In November 2001, the Company agreed to transfer its UK home and motor general business operations to Winterthur Insurance and
the Churchill Group, its UK subsidiary. On 31 December 2001 the insurance liabilities of the business were almost wholly reassured,
to Winterthur. The related cash transfer for this reinsurance was offset in January 2002 against the sale proceeds of the business. The
sale was completed on 4 January 2002 for a consideration of £353m. After allowing for the costs of the sale and other related items,
it is anticipated that the profit on sale recorded in the 2002 results will be approximately £360m before tax.
36. Transactions with Directors
At 31 December 2001, transactions, arrangements and agreements entered into by the Group with directors and connected persons
included:
Number of
persons £000
Mortgages and other borrowings from Egg plc 3 575
These transactions are on normal commercial terms and in the ordinary course of business.
70 Prudential plc Annual Report 2001